“Housing bottoming is going to surprise a lot of people”

From the WSJ:

Housing Shows Signs of Life

The U.S. housing market, a notable soft spot in the nation’s weak economy for the past four years, is becoming less of a drag on the recovery.

Real-estate markets are showing signs of life as falling prices spur buyer demand, lifting home sales and new construction from the depressed levels of the past three years. The spring selling season, traditionally the busiest period of the year, appears to be off to its best start in five years. Sales of existing homes in January and February were at their highest level since 2007, according to data out Wednesday, though sales in February edged down by 0.9% from January on a seasonally adjusted basis. The decline in real-estate prices has slowed its pace, making Americans less cautious about spending and potentially more disposed to buy a home.

For the first time since 2005, investment in residential real-estate, including home building and renovation, has contributed to U.S. economic output for the past three quarters.

Granted, the housing market continues to struggle. Home prices have yet to hit bottom, and credit standards remain tight. Nearly 11 million homeowners owe more than their properties are worth, while a glut of potential foreclosures still threatens markets. With housing a much smaller part of the U.S. economy after the financial crisis, ripple effects from improvements may pack less punch.

“Housing bottoming is going to surprise a lot of people,” said Kenneth Rosen, a housing economist at the University of California, Berkeley. “Housing was pulling us down consistently, quarter after quarter, for years. That was really over in 2011.”

A housing stabilization could put the recovery on more solid footing. Growth in manufacturing outpaced expansion in the broader economy when the recovery began in the second half of 2009, and the job market has picked up recently, instilling confidence in consumers and businesses and giving landlords room to raise rents.

Real-estate agents and home builders from Florida to the Midwest and California are reporting more activity as buyers take advantage of prices that are down by one-third from their peak as well as low interest rates that have made housing more affordable than at any time in the last decade.

“People are looking around saying ‘It’s costing me more to rent than to buy,’ ” says Ronald Peltier, chief executive of HomeServices of America Inc., which owns real-estate brokerages in 21 states. Home-purchase contracts in January and February are up about 20% from a year earlier for HomeServices, a subsidiary of Berkshire Hathaway Inc., and Mr. Peltier said the firm now expects sales growth of around 10% this year, upgrading its forecast last fall for flat sales levels in 2012.

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193 Responses to “Housing bottoming is going to surprise a lot of people”

  1. grim says:

    From the Record:

    In North Jersey, it has become cheaper to buy than rent a home

    Rent or buy?

    With home prices declining, and rents rising, it’s now cheaper to own your home than rent in most of the U.S., even in expensive markets like North Jersey, according to Trulia, a real estate website.

    Trulia says the buy/rent ratio is 12.5 percent in Bergen County, on a scale where a ratio of 15 or less means that buying is a better deal than renting. But it cautions that for homes with more than two bedrooms, renting can be less expensive than buying in the New York metropolitan area and North Jersey.

    “People will pay more for a home if they expect prices to rise and give them a better return on their investment,” said Jed Kolko, Trulia’s chief economist. “Metros where homeownership is expensive tend to have stronger long-term economic growth and little room to build new homes, like Boston and the San Francisco Bay Area, where people expect home prices to increase over time. Buying is much cheaper than renting in slow-growing places with high vacancy rates and land to spare, like Detroit and Cleveland, where prices are unlikely to improve much in the future.”

    Trulia figures the buy/rent ratio by dividing a home’s sale price by the annual monthly rent it could fetch. So a home that would sell for $300,000 and rent for $2,000 a month would have a ratio of 12.5.

    Of the 100 metropolitan areas surveyed by Trulia, 98 offer better conditions for buying than renting. The two exceptions are Honlolulu and San Francisco, two of the most expensive housing markets in the nation. And the New York metropolitan area is at 14.5, just barely in the “better to buy” category. Manhattan is at 20, meaning it’s less expensive to rent than buy.

  2. grim says:

    From Businessweek:

    US home re-sales dip but best winter in 5 years

    U.S. sales of previously occupied home dipped last month but the sales pace for the winter was the best in five years.

    The National Association of Realtors said Wednesday that home sales fell 0.9 percent last month to a seasonally adjusted annual rate of 4.59 million. That’s down from a revised 4.63 million sold in January — the highest level since May 2010.

    The last three months have been the best for winter sales in five years. A mild winter and a stronger job market have helped boost sales ahead of the all-important spring buying season.

    Even with the gains, sales remain below the 6 million that economists equate with healthy markets. And the makeup of those sales still signals a troubled market.

    Sales among first-time buyers, who are critical to a housing recovery, fell slightly to 32 percent of all purchases. That’s down from 33 percent in January. In healthy markets, first-time buyers make up at least 40 percent.

    And homes at risk of foreclosure made up 34 percent of sales, down only slightly from 35 percent in January. In more stable markets, foreclosures make up less than 10 percent of sales.

  3. grim says:

    From the Press of Atlantic City:

    South Jersey home sales gaining strength, up 8 percent over last year

    As spring home shopping starts, the housing industry is beginning to contribute to the economic recovery nationally and locally.

    February homes sales in the U.S. were 9 percent higher than a year ago, and sales in Atlantic, Cape May and Cumberland counties nearly matched the gain at 8 percent, Realtor figures showed Wednesday.

    “The good thing is, this reverses the trend of last quarter where local sales were not keeping up with the national numbers,” said Anthony D’Alicandro, president of the Atlantic City and County Board of Realtors. “One reason was a lack of housing inventory, and in January and February we had back-to-back 7 percent increases in the listings coming onto the market.”

    The faster start to home sales this year is building on a trend that began last year, said Jeffrey Otteau, a prominent housing analyst and president of Otteau Valuation Group.

    “The recovery of the New Jersey housing market began slowly, with a 5 percent increase in home-purchase contracts during the second half of 2011,” Otteau said. “The speed of that recovery accelerated in January with 4,700 home-purchase contracts, which reflects a 31 percent increase compared to one year earlier.”

    Otteau said that was the best sales performance since 2008, and even 100 more than January 2010, when sales were boosted by federal tax credits for homebuyers.

    February homes sales were about 1 percent lower than January, and in Atlantic, Cape May and Cumberland counties combined existing home sales declined to 249 from 260 the month before.

    Economist Joel Naroff, president of Naroff Economic Advisors, said the data indicates the rising sales pace seen in January will continue.

    “When you compare the level of purchases with what occurred a year earlier, sales were up solidly in every region. Also, prices are now rising for both condos and single-family dwellings. That is really good news,” Naroff said in a commentary on the Realtor figures.

    He said it was reasonable to expect home sales to increase 10 percent this year compared with last. “That would be really welcome news.”

    The Ocean City market had 15 sales in February compared to nine in January and 12 in Febuary 2011.

    Jeff Quintin, of Prudential Fox & Roach Realtors in Ocean City, said contracts for future sales there more than doubled to 58 in January and stayed at that level last month.

    “Buyers are making decisions quicker, and the high-end buyer is coming into the market now, so the average price is going up as higher-end properties sell,” Quintin said.

  4. Mike says:

    Good Morning New Jersey

  5. Mike says:

    What realtor does the staff writer in number 1 work for?

  6. grim says:

    From the NYT:

    In Buying House Out of Foreclosure, ‘I’ve Done My Part’

    WHEN I bought a home out of foreclosure in 2009, it took over 1,000 hours from beginning to end.

    I visited properties, looked up county tax records and considered neighborhoods while researching comparable home values. I assembled a team that included two tenacious real estate professionals; a first-rate contractor; a mortgage broker to help navigate the tangle of Federal Housing Administration, Internal Revenue Service and city and county regulations; as well as my parents.

    To anyone driving by, my home is a modest bungalow in Edgewood, a working-class neighborhood about two miles east of downtown Atlanta. To me, it is a labor of love in a community I consider my adopted home.

    Edgewood was built to help meet growing housing demands among the working class in the early 1900s. After World War II, the middle class fled for the suburbs and the neighborhood faced a period of economic malaise. But by the 1980s homes in Atlanta neighborhoods had begun a slow process of regaining value — and the more controversial processes of gentrification, which can raise a neighborhood’s property values but also displace lower-income residents.

    Edgewood has trailed somewhat behind its neighbors in this regard, which was probably one reason I was able to obtain this particular house. But it seems to be next in line. A large shopping complex with a mix of big-box retailers, restaurants and high-end boutiques that opened in 2003 was an early sign of the Edgewood renaissance.

    The economic crisis, however, was a major setback for the neighborhood’s development. According to Trulia, another real estate tracking Web site, the median sales price in Edgewood, which was $101,698 in the first quarter of 2012, has dropped 20 percent since last year (and 37 percent since five years ago).

    In 2009, I decided to take my shot at buying a home, knowing that the low prices left following the housing bubble might be the only chance I would ever have at homeownership.

    As for the economic comeback, many experts say they believe that the recovery of the housing market is necessary to the recovery of the overall economy. And now I know that I’ve done my part. Rehabilitating an empty home is good for the community; it improves home values for everyone on my street. So I don’t see buying a foreclosed home as taking advantage of others’ misfortune or making risky decisions that will contribute to the next crisis.

    Quite the contrary: as the employment situation improves, young adults will have the opportunity to make the same move that I did and we will play significant roles in stimulating further economic recovery. I hope we will be able to do it with less personal debt and more savings, which will lead to greater overall stability.

    Remembering how certain I was just three years ago that the American dream had drifted out of reach, it feels remarkable to look around at my little home, my growing equity, my affordable cost of living and my lovely neighbors, some of whom have lived here for nearly 70 years.

    Sure, I haven’t forgotten the guts it took for my parents to do what they did, nor the hundreds of hours of manual labor I poured into every corner of my home. Still, it’s hard to imagine a more favorable market for young Americans and middle-class families to try to do what I did.

  7. grim says:

    6 – Or if you are looking for the Forbes viewpoint on the issue, similar story, different spin…

    How To Buy A Mansion On The Cheap

  8. Essex says:

    Rooting for a continued downturn in housing is like rooting for a candidate that wants to regulate America’s sex lives and reward top earners with more breaks while sticking it to the middle class. Housing is the middle class piggy bank. Wake up.

  9. grim says:

    5 – Mike – Kathleen has been around for a long time now, I believe I met her in person a few years back (2006 maybe, damn that seems so far ago). She was one of the first writers at the Record to take some really hard shots at the market when most others were afraid they’d scare off the real estate advertising revenues.

  10. grim says:

    Must be the weather, Olick is taking a somewhat positive view on the impact of rising mortgage rates…

    From CNBC:

    Rising Mortgage Rates May Not Hurt Housing

    It was barely a few weeks ago that mortgage rates were sitting at record lows.

    The idea of rates over 4 percent on the 30-year fixed seemed a distant memory.

    And here they are now at 4.05 percent on the Bankrate.com overnight, thanks to the recent rise in Treasury yields.

    The housing market, it seems, just can’t catch a break. Or can it?

    As the economy improves, the job market improves, and that is a key driver for housing. But on the flip side, as the economy improves, investors finally crawl out of the Treasury bunkers, driving yields higher, and mortgage rates generally follow the 10-year Treasury.

    “We will definitely see a freeze up in refi’s immediately but the decision on a purchase still won’t be impacted until rates get at least to 4.5 percent I believe,” says Peter Boockvar at Miller Tabak. “Assuming a $200k mortgage, going from 4 to 4.5 percent in mortgage rate adds about $60 per month to one’s payments, and while an extra $700 per year matters, I’m not sure if it’s a deal breaker.”

    And then there could be one other phenomenon, as described by Freddie Mac’s chief economist Frank Nothaft: “When rates tick up, you may see some potential home buyers who have been sitting on the sidelines, suddenly they may get up, as they are concerned that maybe this is the beginning of a trend, and they don’t want to miss out on these 60-year low mortgage rates. In the near term it can encourage buyers.”

  11. Comrade Nom Deplume says:

    Hey, liberal Essex is back. Where was ya?

  12. sx (8)-

    Certainly, a few selected markets are coming back (Atlanta, Miami, etc). What the articles don’t tell you is that they have improved from flat-line-dead to wheezing on life support.

    Only growth in my area is in abandoned McMansions and food stamp usage.

  13. The next leg down is coming, too. All the suckers piling in now (to get those low, low rates that we’ve basically had since 2001) will be cashiered forthwith.

  14. 300k price with a 14K (and growing like Ebola in a petri dish) property tax bill. Yeah…that’s the ticket!

  15. brian says:

    To SRK from yesterday evening:

    http://wipp.edmundsassoc.com/Wipp1225/#taxPage9847

    If you assume the two quarters not listed will follow the same pattern as the first two for 2012, taxes are $9145/yr.

    http://tax1.co.monmouth.nj.us/cgi-bin/m4.cgi?district=1225&l02=122500387__0100001__01_____M

    This seems to show a similar number.

  16. Jason says:

    Won’t be long before “Grim” changes his call name to “Giddy”.

  17. brian says:

    Hey Grim is meat right? Can you post numbers for Jersey City?

  18. Brass Balls says:

    Port Authority of N.Y., N.J. Targets Worst Toll Violators
    Thursday, March 22, 2012

    The Port Authority of New York and New Jersey is aggressively going after uncollected toll revenue, filing 14 civil suits on Tuesday against what it calls the most egregious toll violators.

    Hey they are bringing in revenue baby!

  19. gary says:

    But it cautions that for homes with more than two bedrooms, renting can be less expensive than buying in the New York metropolitan area and North Jersey.

    This is f*cking hilarious. I mean, really. In other words, unless you buy a piece of sh1t two bedroom house on the Haledon/Paterson border or in the middle of Burlington County, renting makes more sense than buying.

  20. 3B says:

    #1 Does the rent buy scenarion in North Jersey factori n property taxes? Just asking?

  21. 3B says:

    #10/12 I wonder what happens when some day we get back to 7 and 8% mtg rates? Just asking.

  22. Mike says:

    Here’s a 300K home in Elmwood Park as used in her example http://www.weichert.com/26833264/?cityid=15849&mls=53&pg=3 only one bathroom from the 70’s a kitchen that needs updating, looks like knotty pine in the bedroom (Yuk) and paneling in the family room. As long as you’re happy with all this and don’t put another dime into it yes much better than renting

  23. SRK says:

    15 – Brian, Thanks ! I didnt know about the wipp.edmundss site, knew only the monmouth site. Yes taxes are higher than given in that weichert ad. But looks like he has plenty of buyers since he has increased the LP. Looks like nice houses needing very little work are getting grabbed. This one, http://www.zillow.com/homedetails/52-Michael-St-Iselin-NJ-08830/39199681_zpid/ went under contract within 3 weeks of listing at about 268K. I was also making offers and counter-offers, but I was stuck with some health issues in family for a couple days in between and was not responding quickly enough and lost the bid.

  24. SRK says:

    I apologise if this question is inappropriate for this forum, moderator may please remove it if (s)he thinks so.

    If I see house H with agent A, for some reason I stop working with A, and H is taken off the listing. A couple months later H is listed again, with some updates I like and now I want make an offer on it, do I still need to work the offer thru A ?, that is, does A still have procuring cause on that house ?

  25. brian says:

    I got there through the woodbridge township site, then clicked on the taxpayer information link on the bottom left. A lot of towns have tax record systems you can access from the internet. Sometimes public utility information is available too. Might help you find if there is a sewer assessment on a property you are looking at.

    B

    23.SRK says:
    March 22, 2012 at 8:50 am
    15 – Brian, Thanks ! I didnt know about the wipp.edmundss site, knew only the monmouth site. Yes taxes are higher than given in that weichert ad. But looks like he has plenty of buyers since he has increased the LP. Looks like nice houses needing very little work are getting grabbed. This one, http://www.zillow.com/homedetails/52-Michael-St-Iselin-NJ-08830/39199681_zpid/ went under contract within 3 weeks of listing at about 268K. I was also making offers and counter-offers, but I was stuck with some health issues in family for a couple days in between and was not responding quickly enough and lost the bid.

  26. nwnj says:

    Prices fell 2% YoY in February in the northeast according to NAR(hahaha I know) yesterday. Where is the evidence of a bottom?

  27. gary says:

    3B [20],

    No, it does not take taxes into consideration. It would blow that model to bits. When the taxes alone are north of $1000 per month, the rent/buy ratio becomes null.

  28. grim says:

    Cut and Paste from Calculated Risk:

    Merrill Lynch (one of the remaining major housing bears) came out with a new piece this morning:

    When we released our proprietary home price model in November, we forecasted that home prices would fall another 8% from 2Q11 through 1Q13. Since publishing, the 3Q and 4Q data releases showed actual home prices dropped 3.2% in the second half of 2011, implying another 4-5% decline remained based on the earlier forecast. More information has come our way since the initial forecast, including favorable developments on the policy front, better economic data and a decline in the supply of homes on the market. We have therefore updated our home price model and believe that prices are bottoming now. However, we continue to believe the recovery will not begin in earnest until 2014.

  29. grim says:

    From MarketWatch:

    U.S. jobless claims fall 5,000 to 348,000

    Applications for weekly unemployment benefits set a new four-year low, the government reported Thursday, in another sign that the U.S. labor market continues to gradually improve.

    Initial claims fell by 5,000 to a seasonally adjusted 348,000, the lowest level since February 2008, the Labor Department said.

    Claims from the prior week were revised up to 353,000 from an original reading of 351,000.

    The four-week average of claims, meanwhile, dipped 1,250 to 355,000, just slightly above a four-year low. The monthly average provides a more accurate view of labor-market trends by reducing week-to-week volatility caused by seasonal quirks.

    New applications for benefits fell below the key 400,000 threshold in the first week of January and have remained there ever since. Lately claims have settled in the 350,000 range, a level typically associated with above-average job growth.

  30. Pete says:

    3B,
    “#1 Does the rent buy scenarion in North Jersey factor n property taxes? Just asking?”

    No, it does not. The simple calculation they used was (median asking price of 2 bedroom apt for sale) / (median asking price of 2 bedroom apt for rent).

    The disturbing part is that this trulia “study” has been getting quite a bit of pub in the media. Perception is reality. I smell another dead cat bounce coming.

  31. brian says:

    Wow $6500 in taxes. No wonder it was snapped up. I’m being robbed. Assessments in my town are pretty much in line with home values where I live. I’m starting to think I don’t have much ground to stand on if I appeal.

    23.SRK says:
    March 22, 2012 at 8:50 am
    15 – Brian, Thanks ! I didnt know about the wipp.edmundss site, knew only the monmouth site. Yes taxes are higher than given in that weichert ad. But looks like he has plenty of buyers since he has increased the LP. Looks like nice houses needing very little work are getting grabbed. This one, http://www.zillow.com/homedetails/52-Michael-St-Iselin-NJ-08830/39199681_zpid/ went under contract within 3 weeks of listing at about 268K. I was also making offers and counter-offers, but I was stuck with some health issues in family for a couple days in between and was not responding quickly enough and lost the bid.

  32. Anon E. Moose says:

    nwnj [26];

    Prices fell 2% YoY in February in the northeast according to NAR(hahaha I know) yesterday. Where is the evidence of a bottom?

    “Just the place for a Snark!” the Bellman cried,
    As he landed his crew with care;
    Supporting each man on the top of the tide
    By a finger entwined in his hair.

    “Just the place for a Snark! I have said it twice:
    That alone should encourage the crew.
    Just the place for a Snark! I have said it thrice:
    What i tell you three times is true.”

    Lewis Carroll, The Hunting of the Snark

  33. 3B says:

    #29 Lately claims have settled in the 350,000 range, a level typically associated with above-average job growth.

    And yet almsot half the new jobs created in Feb were part-time or seasonal. Just saying.

  34. Juice Box says:

    re #29 – Unemployment for the youth of America is 50%.The real unemployment numbers are closer to 20%. According to a new Census stat 51 million households had incomes less than 50 percent above the official poverty line, and nearly half of these households were in suburbs.

    Interesting read on what Meat hints at, Suburban Poverty.

    http://campaignstops.blogs.nytimes.com/2012/03/19/the-new-suburban-poverty/

  35. gary says:

    Juice [34],

    What we need is more affordable houses. You know, like a cape at $325,000 and property taxes at an affordable $11,500 per year.

  36. Juice Box says:

    Jut a snippet from Daniel Amerman on our new class of underemployed in America.

    “The heart of the long-term problem with employment in America,when we compare the population for 2000 and 2012, and those fully employed in each year. The “working age” civilian population rose almost 30 million – from 212.6 million to 242.3 million – while the number of fully employed people fell 1 million, from 133.7 million to 132.7 million.

    Our long term labor force participation rate is about 66%-67%, or two-thirds. So to maintain constant employment rates, if there are 30 million more people over 16, there need to be 20 million more people in the labor force, and roughly 19 million more jobs (allowing for normal unemployment). Instead, when we look at the fully employed (employed workers less involuntary part-time workers), there are one million fewer jobs now than in the year 2000.

    Thirty million more people over the age of 16 and one million fewer people being fully employed is a shortfall of 20 million jobs, and this by itself creates Great Depression range unemployment levels. Fundamentally, this is not even remotely consistent with a reported unemployment rate in the 8% range.”

  37. gary says:

    Juice [36],

    Try explaining this extract to the pudgy muppets in a manner they can comprehend. If it doesn’t contain the terms “iPad” or “Mr. Cupcake” in the conversation, they’re lost.

  38. WickedOrange says:

    What Happens When A 35-Year-Old Man Retakes The SAT?
    http://deadspin.com/5893189/what-happens-when-a-35+year+old-man-retakes-the-sat

  39. Juice Box says:

    Freedy – nice looking building built way back in 1929, must have been a really nice place to live back then.

    http://eleven80rentals.com/

  40. Shore Guy says:

    Hey, is this about real estate agents?

    http://www.youtube.com/watch?v=l0CQ8iaK5s8&feature=related

  41. Shore Guy says:

    Lets assume that suckers in the NJ/NY metro dive right back into buying real estate because they accept the line that there is no better time to buy and they ignore the role of taxes in their cost calculations. Given income data and the likelihood that we will see another recession inthe next 4-5 years, it seems that the imprudent are setting themselves up for another big economic hit, which will, I suspect, will quickly erase any paper gains they may have made in housing.

  42. SRK says:

    25 – Brian, Thanks for navigation tips, very valauable to woodbridge tax assessment. Will check out sewer assessments also. Yup, at 6500 taxes it was a steal, my bad luck ! :-(

  43. 3B says:

    #43 Shore: I do not see how any one can ignore property taxes in their calculations. I think another recession (assuming one believes this one is over) will be alot sooner than in 4 or 5 years. Even sooner if gas prices continue to remain high.

  44. brian (17)-

    I work for RE people in JC. I already know the numbers. As far as new construction goes? Sales up, profits nonexistent.

  45. SRK (24)-

    No. Procuring cause can only be enforced when it’s an UNBROKEN chain of actions that leads to a sale. You break the chain by simply choosing to work with another agent.

  46. Painhrtz - I ain't dead yet says:

    If we shoot the unproductive boomers it will have a positive effect on unemployment and entitlement programs

  47. Pete (30)-

    It’s just another MSM con job, trolling for a new set of suckers to turn into housing slaves.

    Extinction before recovery.

    “The disturbing part is that this trulia “study” has been getting quite a bit of pub in the media. Perception is reality. I smell another dead cat bounce coming.”

  48. brian (31)-

    Yeah, the world is beating a path to live in your corner of Dogpatch. Where else does one have the opportunity to own a 300K POS with a five-digit tax bill, abandoned McMansions all around you and a gene pool rich in three-chromosome types?

    “Assessments in my town are pretty much in line with home values where I live.”

  49. 3b (33)-

    And look at the exciting jobs our new, vigorous necronomy is creating:

    http://www.businessinsurance.org/inside-retailers-warehouses/

  50. 3B says:

    I posted the below item earlier in the week. Look at all the comments!!! Alot of very unhappy people; it is like the whole town woke up!!! A little late however!!!

    http://riverdell.patch.com/articles/realtors-new-assessment-will-drive-people-out-of-town

  51. Juice Box says:

    re: # 48 – “If we shoot the unproductive boomers”

    My High School AP History teacher used to joke that our generation when we got older would be putting pillows over the heads of the elderly as they slept to cull their ranks.

  52. Shore Guy says:

    52, it matters not.

    Unlike a store, which might fail if it drives away customers by raising prices too high, the property still remains and somebody will pay the freight or the town will take the asset. Either way, the town will get paid – by the current owner, by a new owner, or by selling off the property taken away to satisfy a tax bill– they wil be paid.

  53. Juice Box says:

    3B – when is the moving party? You should invite all the neighbors and have a nice loud rock band and server some misterbrau on tap.

  54. SRK says:

    47 – Thanks ! But I read time and again everywhere that if an agent that shows you the house first, s/he can claim procurement if buyer subsequently decides to go with someone else to put an offer.

  55. Shore Guy says:

    will

  56. Don’t discount the effectiveness of genocide.

  57. SRK (56)-

    They also used to say you could get AIDS from hugging someone.

  58. Chuchundra says:

    The Trulia rent/buy ratio is a very basic calculation that’s meant to show whether it’s generally better to rent or buy in a specific region based on the ratio sale prices to yearly rent. Obviously a lot of other factors come into play when you look at whether it actually makes sense for you.

    On the other hand, a 12.5 ratio makes a pretty compelling argument for a purchase in the current environment. That would mean a house that rents for $2000/month should sell for about $300,000. At current rates that’s about $1500 a month for P&I. Even with high NJ taxes, that’s probably still less per month after you factor in the tax advantages of home ownership.

  59. gary says:

    As suspected, the realtor I spoke with at an open house this past weekend sent me an email. This was a house that was well-kept, nice layout, beautiful neighborhood, at the end of a cul-de-sac in River Vale. It was one of the very rare open houses where the family actually paused to think about making an offer.

    The problem, as I mentioned the other day, was the taxes. It’s a 4/2 split on approximately 100 x 125 property at $14,000 a year in taxes with a 620K price tag. We all know the price is too high; that’s a given. The killer, of course, is the taxes. I explained this nicely in a return email to the realtor. We can’t manipulate the theft inflicted upon us by the politboro in the form of taxes. That means the prices are headed in one direction. We’re still in the middle of the 5th inning.

  60. Nicholas says:

    A townhome came on the market in our community where we are renting. The unit was an exact copy of ours just about 50 feet from our door. No difference from what I can see of the pictures.

    I ran the numbers, including taxes, HOA fees, interest rates, closing costs and my numbers told me that if I stayed at least 3 years that it would be better off owning that unit. That was taking into account that the property had zero percent appreciation.

    I’m not so certain that Trulia is that far off in many communities. I am remaining on the sidelines for the rest of this year but only because there is a very real possibility of an overcorrection.

  61. brian says:

    You’re right. There’s an ongoing battle to expand 517/616 because of the increasing traffic. Many of my neighbors are from Morris county, Bergen County, Union, Essex and Hudson. Another from Staten Island. Must be sick of living near the cranky b@stards in your area.

    50.There Went Meat says:
    March 22, 2012 at 10:28 am
    brian (31)-

    Yeah, the world is beating a path to live in your corner of Dogpatch.

  62. Shore Guy says:

    http://www.nytimes.com/2012/03/22/nyregion/no-show-jobs-taint-new-york-harbor-waterfront-commission-says.html?src=un&feedurl=http%3A%2F%2Fjson8.nytimes.com%2Fpages%2Fnyregion%2Findex.jsonp#

    Corruption has been ingrained in the docks around New York Harbor for so long that the movie most identified with it was filmed in black and white. But 58 years after the release of “On the Waterfront,” no-show jobs held by relatives of mobsters and other well-connected people continue to vex government officials trying to make the ports more efficient and more competitive.

    snip

    The report said shipping companies paid salaries that exceeded $400,000 for jobs that “require little or no work.”

    Unlike workers at other ports, those on the docks in the New York area operate in gangs that are much bigger than needed, the report said. Three dockworkers are paid to operate each crane, although only one can work at a time. The work rules result in many workers’ being paid for 24 hours per day and, in some cases, as many as 27 hours within one day.

    snip

    Joseph C. Curto, president of the New York Shipping Association, which represents the companies that operate the cargo terminals.

    Mr. Curto acknowledged that the ports had been burdened by “excessive staffing and overtime payments that can no longer be sustained or rationalized.” Those costs “have made the port unnecessarily expensive and less competitive,” Mr. Curto said.

    But Mr. Curto did not welcome the commission’s call for putting an end to those practices. Instead, he urged the commission, a two-state agency charged with policing the docks, to back off.

    “We will address these issues during labor negotiations as part of a smart business plan; not because the Waterfront Commission thinks we should,” Mr. Curto said. “The public policy of the United States calls for collective bargaining to be conducted by the private parties involved without governmental interference.”

    snip

    The report also focused on the union’s employment of so many relatives of organized crime figures, most notably Vincent Gigante, the deceased head of the Genovese crime family, who was known as the Chin. One of Mr. Gigante’s nephews, Ralph, is a shop steward for one of the longshoremen’s union locals, a job that has paid him $400,000 a year or more. Ralph is one of nine of Mr. Gigante’s relatives working for the union, the report said.

    Two of Mr. Gigante’s sons-in-law, Joseph Colonna and Robert Fyfe Jr., are shop stewards for the same local as Ralph Gigante is, according to the commission. Mr. Colonna succeeded Mr. Gigante’s brother-in-law, John Bullaro, and was paid about $400,000 in 2009, the report says.

    When asked in November 2010 how that came to be, James Devine, the president of N.Y.C.T., a large terminal operator, gave a simple answer: “Influence,” he testified.

    While the commissioners say there is annual pay of more than $400,000 for shop stewards who have no clearly defined duties, Mr. Daggett testified to the contrary. He said the stewards worked 24 hours a day to ensure that there were no labor problems in the port. And, he added, $400,000 was “not a lot of money today.”

  63. 3B says:

    #55 Juice: That would be fun, but seriously I will be kind of sad going. And all things being equal I would have stayed, had not the elected officials (both municipal, and BOE), and residents not made such a mess of the place.

    In the end I will be gracious, nothing gained by gloating or saying I told you so.

  64. 1987 Condo Buyer says:

    Gary, if you just look in towns with a 2% tax ration you can avoid your tax disappointments, but I think you or your spouse is choosing an area where the taxes are crazy. I knew in 1993 to avoid West Orange, Montclair, etc.

    Brian, almost all of NJ is better than Staten Island. Bloomberg keeps upping the property tax, my brother pays $4k property and another $6k NYC income (3% of 200K household) plus NYS tax. For this:

    25 minutes traffic to any store

    Limited off street parking, cars taking up every spot on street, fun after a snow storm

    40×100 lots

    Septic tanks!

    Road infrastructure from 1930’s

    20 minutes to get a cop..if they come at all

    NJ Housewives as every neighbor who isn’t a cop, fireman , tolltaker or not working but has more money than you!

    High water and utility bills with surcharges (MTA surcharge on your electric bill!)

  65. Double Down says:

    If you’re unwilling to pay NJ taxes, your alternative is to move out of the state.

    People should know what the taxes are on a 4BR on 1/4 acre in town X. If those taxes are not acceptable, look in another town, or another state.

    NJ will not be fixed any time soon, so either learn to live with the pain, or move to greener pastures.

  66. Painhrtz - I ain't dead yet says:

    I could have writtent his article in 4 words

    Live in Nj

    http://finance.yahoo.com/news/first-person-earn-more-100-000-still-feel-151200753.html

    Based on his stated earnings and expenses something does not add up. If he is taking all deductions, still claiming dependents. He should be clear 5K a month. Saving 1300 a month of that covers his rugrats college expenses. Which means he still has 3700 a month for burn rate bills and probably something left over. Also, how f*cking good are the community colleges in FL that they cost that much? My nephews who are probably going to Florida Schools as residents of that state won’t being paying that much going to Univesity of Florida. I call BS

  67. gary says:

    1987 Condo Buyer [66],

    Gary, if you just look in towns with a 2% tax ration you can avoid your tax disappointments, but I think you or your spouse is choosing an area where the taxes are crazy.

    I don’t think it exists within a 50 mile radius of Manhattan. The bigger question here is: where does it end? How much more do we get bilked, hoodwinked and swindled before we can’t even live in the State any longer? The pay scale is flat to 2% increase YOY during a 10 year period while houses AND taxes double? Sell to Whom?

  68. Jill says:

    Pain #48: What about the productive boomers? May I assume you want to shoot us too? My only regret is that I won’t be around to see when later generations want to shoot you.

  69. evensteven says:

    Can I ask this board for analysis of a rent vs. buy scenario?

    A house with an asking price of 320K and $6,000 per year taxes.

    vs.

    Rent – $1900/month.

    All other things equal, is it better to rent our buy this house?

  70. Painhrtz - I ain't dead yet says:

    Jill, no offense to you but the good number of your generation are plague upon this nation.

    follow up on the article I posted

    hillsborough college which serves tampa

    here is the tuition schedule for florida residents

    Florida Residents :

    Tuition $78.11
    Student Financial Aid 3.91
    Student Activity Fee 7.23
    Capital Improvement 7.23
    Technology 3.91
    Access Fee .54
    Total Per Credit Hour $100.93

    so if his two precious snowflakes take 40 credits a year each (unlikely probably closer to 30, his vig should come in under less than 10K) and the 1000 bucks a month for food maybe he should start eating the takeout his delivery boy kid brings home at the end of the night. I continue my call of BS

  71. Metroplexual says:

    I don’t think it has bottommed here in NJ yet. In Las Vegas and other fast rising house price cities it is near the bottom. Many of the short sales and foreclosures in LV are gettig scooped up. Just in my neighborhood in Hendeson, NV we had 2 houses right behind us for sale and they are closing in about a week or two. Inventory is going down and there is multiple bids on properties so the mentality is rebounding at least.

  72. gary says:

    evensteven [71],

    Based on those numbers, if you have 20% to put down at today’s 30 yr. fixed rate, it makes sense to buy as the PITI and the rent will be approximately the same.

  73. Comrade Nom Deplume says:

    [48] pain,

    Some of us tail end boomers are decent shots.

  74. 1987 Condo Buyer says:

    #69, I am 15 miles west of Times Square, In Essex County, under 2%, Roseland, Fairfield, North Caldwell, Littlefalls, under or around 2%. 90% of Morris county I think is under 2%. Ridgewood is under 2%

  75. Painhrtz - I ain't dead yet says:

    Nom but us Gen xers still have better eyesight ; )

  76. chu (60)-

    I’ll put on my investor boots when that $2,000 rental home is asking 200K. Just like in 1996.

    “On the other hand, a 12.5 ratio makes a pretty compelling argument for a purchase in the current environment. That would mean a house that rents for $2000/month should sell for about $300,000.”

  77. Brass Balls says:

    To quote Jesus: Tim Tebow heals the sick, increases NJ home values, cures the wounded, will prevent the 2012 Apocalypse and will lead the Jets to the Promised Land. Thus I decree.

  78. Brass Balls says:

    Monthly rent should be 1% of purchase price. A 200K home should rent for 2K a month.

    Chuchundra says:
    March 22, 2012 at 10:46 am
    The Trulia rent/buy ratio is a very basic calculation that’s meant to show whether it’s generally better to rent or buy in a specific region based on the ratio sale prices to yearly rent. Obviously a lot of other factors come into play when you look at whether it actually makes sense for you.

    On the other hand, a 12.5 ratio makes a pretty compelling argument for a purchase in the current environment. That would mean a house that rents for $2000/month should sell for about $300,000. At current rates that’s about $1500 a month for P&I. Even with high NJ taxes, that’s probably still less per month after you factor in the tax advantages of home ownership.

  79. Brass Balls says:

    parts of Rockville Centre Lone Island that same identical home you described has 31K a year taxes. And that is not even a top notch LI neighborhood compared to Manhasset, Garden City or Laurel Hollow. Just mainly 60×100 60 year old run down houses. But it is close to projects so if you need to score crack you are set.

    gary says:
    March 22, 2012 at 10:49 am
    As suspected, the realtor I spoke with at an open house this past weekend sent me an email. This was a house that was well-kept, nice layout, beautiful neighborhood, at the end of a cul-de-sac in River Vale. It was one of the very rare open houses where the family actually paused to think about making an offer.

    The problem, as I mentioned the other day, was the taxes. It’s a 4/2 split on approximately 100 x 125 property at $14,000 a year in taxes with a 620K price tag. We all know the price is too high; that’s a given. The killer, of course, is the taxes. I explained this nicely in a return email to the realtor. We can’t manipulate the theft inflicted upon us by the politboro in the form of taxes. That means the prices are headed in one direction. We’re still in the middle of the 5th inning.

  80. nwnj says:

    #77 1987- Everything in Morris on the low end of the market is approaching 3% per year.

  81. Mikeinwaiting says:

    Gary 75 At 20% you just dropped in 64 K, OK premise is you have 64K. I would rent it & invest 64k, cost about same monthly PITI/rent, right. Job change possible , taxes keep increasing ( a given) rent may to but balances the equation, why buy it.

  82. Anon E. Moose says:

    Chuchundra [60];

    Good to see you. Nice easy winter this time around. Hope things are good. Still owe you on our micro-bet.

  83. Mikeinwaiting says:

    “I’ll put on my investor boots when that $2,000 rental home is asking 200K. Just like in 1996.”
    Ding, ding, ding give the man a cigar.

  84. Brass Balls says:

    Lopatcong, N.J., on Moody’s Review for Downgrade
    Thursday, March 22, 2012

    Moody’s Investors Service said it has placed the Aa3 rating of Lopatcong, N.J., under review for possible downgrade, affecting $7.8 million in rated debt.

  85. mikey (86)-

    Gonna be a long walk home. Through ankle-deep mud.

    Boy, are the people who are now calling housing bottom gonna look stupid when the real SHTF.

  86. Metroplexual says:

    BB 87,

    What is happening in Lopat?

  87. Anon E. Moose says:

    Mike [84];

    You do have to take into account 5% realtor costs, and if there are definite and concret plans to alter living circumstances in 3-5 years, buying may be a bad idea for that reason alone. But the buy decision is not inexorable. What makes ‘housing’ and anchor is that idiots overspent with nothing down during the bubble and now can’t deliver title at market prices.

    Suppose I put $100k down on a $500k POS in 2005, and find myself unemployed in 2012 and need to move to find work, but the house value is down 25%. You know what, The balance on the mortgage would be right about current market value. You dump the anchor, get out clean, and move on with your life, and consider that the cost of living for 7 years turned out to be higher than anticipated.

    On the other hand, if I bought in 2005 with a nothing-down interest only loan, I don’t have the ability to pay or to sell, and the only viable option is default and foreclosure.

    In short: the problem isn’t the house, its the mortgage.

    Consider that under current conditions, further broad price moves up OR down are very unlikely to happen with the speed of ~’03-’10.

    Then, if buyers en masse use sensible consideration with their eyes open on the way in, they effectively limits the downside on the way out, even if plans change.

  88. metro (89)-

    Guess the plans for a municipal tractor pull stadium will have to go on hold.

  89. 3B says:

    #88 There: Wasn’t the housing bottom called in 2011, 2010, 2009, and so on, and so on? Just saying.

  90. Mike says:

    What ‘s Trulia’s mold to wet basement ratio?

  91. Brass Balls says:

    BTW homes remaining flat or not beating inflation in terms of increase is not a turn around. Unless home prices are rising faster than the current rate of inflation there is no rush to buy. 2000-2004 when homes were going up 20% a year it was impossible to save for a home, as prices were rising faster that you could save, better to lock in a nothing down, or 3% down mortgage and jump in. Today with homes flat to slightly declining or slightly rising is no need to jump in.

  92. Mikeinwaiting says:

    Moose 90
    I sold my primary 06, guy bought for297 4k down he is screwed could not get a deuce for it now. Now if he put down 60k he still who be in the sh*t. Saved up his 60K like a prudent buyer over a long period of time , now has no bankroll and can not get out.
    Not just the 3% down buyers are in trouble. Oh and buy the way you lost a 100k DP in your scenario, right. Now if you rent invest 100k prudently at the same PITI/rent cost, why would you buy it.

  93. Mikeinwaiting says:

    Pearls of wisdom from John 94 “Today with homes flat to slightly declining or slightly rising is no need to jump in.”

  94. grim says:

    100x rent ratio? Has NJ *ever* approached this? Even remotely?

    We’d be hanging out at the New Jersey Rental Bubble Report blog long before we approached that.

  95. Metroplexual says:

    Grim you are right but hat is generally rule of thumb for places with sane prices.

  96. Metroplexual says:

    TWM (91)
    It might actually be for that albatross of a high school. I used to work for Warren County and in general they are fiscally prudent there (and cheap) .

  97. grim says:

    alter living circumstances in 3-5 years, buying may be a bad idea for that reason alone

    Nobody with a 3-5 year ownership horizon should be buying a house.

  98. grim says:

    98 – 12x annual (144x) was the ‘rule of thumb’ that I’ve always heard folks talk/write about. I think I heard some crap about a “Rule of 15” during the bubble, but that just seems a bit on the high side to me.

  99. grim (97)-

    I counseled never violating this rule to I don’t know how many amateur “RE investors”…even during the bubble. I have pretty much seen people who do not follow this rule carried out on their shields in the years since. I especially love the ones who bought assuming negative cash flow but were willing to bear it in order to “pocket the insane appreciation” 2-3 years out.

    “100x rent ratio? Has NJ *ever* approached this? Even remotely?”

  100. Nicholas says:

    I rent for 1250.00 per month on a 125k townhome right now. Laurel MD.

  101. Lots of FKs all over the place on joints where investors applied that Rule of 15 nonsense.

  102. Mikeinwaiting says:

    Grim my rent is 10% of cost the of home, it happens.

  103. daddyo says:

    You can look at the current price/rent ratios two ways:

    1) Houses are too cheap, and there’s never been a better time to buy!

    2) Rent is too expensive.

    Personally, I don’t think high rents or increasing housing prices can be supported by stagnant or falling real incomes. I expect the ratio will return to it’s long term average by falling rents, not higher home prices.

  104. Brass Balls says:

    The bac reo I backed out of was 190K last offer bank made and I was at 175. I think I could have got it for 185K, but it only rented for 1,600 a month and had $5,500 in property taxes and insurance on a rental would run me like $1,500 a month and maint is normally at least 1% of purchase price.

    That was a bank reo of a home that sold at 325K at peak. Even at 185k it made sense. But it did not make sense for that low ROI given re could fall further, re taxes could rise, or I had bad tennants. I was going to pay cash. But I am good at bond investing so I would be walking away from at least 12K interest income. Which is 1k a month.

    Add it up, 1k a month loss of interest income
    125 a month insurance
    500 a month re taxes
    125 a mont budget for maint (assuming nothing big breaks, ha ha)

    Monthly cost is $1,750 a month. Now all the fees with closing it is even less a deal. However, rental properties there are lots of tax breaks that may make it worth while. But if you screw that up you could lose out.

    Numberswise one would say this is a good deal. I was hoping for a better deal.

  105. brian says:

    We’re doing about 2 or 3 new computer deployments a week for new hires. Full time employees. In 2008 at my old company, we were reclaiming equipment from recently vacated desks.

    51.There Went Meat says:
    March 22, 2012 at 10:30 am
    3b (33)-

    And look at the exciting jobs our new, vigorous necronomy is creating:

  106. Shore Guy says:

    Here is a good reason for Obama to feel the need to pressure Israel not to attack Iran until at least November 7:

    http://www.usatoday.com/money/industries/energy/story/2012-03-21/gas-prices-iran-strait-of-hormuz/53704546/1

    Gas could hit $8 on Iran showdown, experts say

    Gas prices could double if Iran acts to close the Strait of Hormuz to oil-tanker traffic near the beginning of next year, cutting global economic growth by more than 25%, a leading energy-consulting firm said Wednesday.

    snip

    Crude oil prices could briefly hit $240 a barrel in the first quarter of 2013, said Sara Johnson, senior research director for Global Economics at IHS. Brent crude, the benchmark European oil which IHS uses a proxy for global prices, closed at $124.20 in London Wednesday. In the U.S., West Texas Intermediate, the benchmark U.S. crude oil, closed at $107.27 a barrel.

    snip

  107. Great. Does your company have 2 million or so job openings?

    “We’re doing about 2 or 3 new computer deployments a week for new hires. Full time employees.”

  108. 3B says:

    #)8 Brian: That may be the case for your place. But in general people getting excited over a 200k job number of which half were part time or temporary, is to to say the least nonsense.

  109. Shore Guy says:

    “Wasn’t the housing bottom called in 2011, 2010, 2009, and so on, and so on”

    Just watch, at some point they will be right nad then, come the next downturn, they will point to that one correct call as support for their expertise.

  110. Libtard and the City says:

    Heya fools!

  111. 3B says:

    gary: Below is for you 18k a year in property taxes (before the reassessment).

    Thats $1,500.00 in taxes a month before your mtg; in case you were wondering.

    http://www.njmls.com/listings/index.cfm?action=dsp.info&mlsnum=1209547&dayssince=&countysearch=false

  112. Metroplexual says:

    101

    Grim I got it froom listening to Bruce Williams on the radio.
    http://en.wikipedia.org/wiki/Bruce_Williams_(talk_radio_host)

  113. Mikeinwaiting says:

    3b 115 I”ll take two!

  114. brian says:

    Hiring at my company is a good indicator of the overall health of the company. They manage mutual funds here and currently have over $700 billion in assets with offices around the globe. These guys have their fingers on the pulse of the economy and would not be allowed to hire if they foresaw an impending downturn. Also, I only support the two offices in NJ and one in Delaware. There are campus sites in NYC, Canada, Florida and California that are also hiring far more people than the sites I support. We always get irritated because it’s always a cushy job like “Business Analyst” or “IT Analyst” where they mostly blow hot air and babble with people within the company when we need more people in the field actually doing real work.

    110.There Went Meat says:
    March 22, 2012 at 1:16 pm
    Great. Does your company have 2 million or so job openings?

    “We’re doing about 2 or 3 new computer deployments a week for new hires. Full time employees.”

  115. gary says:

    1987 Condo Buyer [77],

    I live 15 miles west of Times Square as well. We are neighbors. I know everyone of those towns you mentioned. The taxes have broken loose in those towns as well. Ridgewood is horrible for taxes. Roseland is decent as long as Pru and a few other corps stay put. Little Falls is ok in Great Notch, the other parts suckk. Forget the tax rate, I’m talking about the taxes. No one is spared. Now, it is simply a smash and grab event to satisfy the pensions and salaries and we’re getting reamed.

  116. Mikeinwaiting says:

    Brain 118 Didn’t we just bailout a lot of bigger outfits with same expertise who were blindsided in a financial train wreak.
    “They manage mutual funds here and currently have over $700 billion in assets with offices around the globe. These guys have their fingers on the pulse of the economy and would not be allowed to hire if they foresaw an impending downturn. “

  117. 3B says:

    #18 Brian:These guys have their fingers on the pulse of the economy and…….

    With all due respect Brian that is an incredibly naive statement to make, and I will leave it at that.

  118. 3B says:

    #17 Mike: I knew I could count on you!!!

  119. Anon E. Moose says:

    Mike [95];

    Oh and buy the way you lost a 100k DP in your scenario, right.

    Mike, I’m not saying that’s the goal, just that the downside under a hefty downpayment scenario isn’t apocalyptic. Did they loose a whole buch of money? Yes. But at least they aren’t paying interest on and compounding their losses. Leverage cuts both ways, and its a b!tch.

    So even if the intrepid 20%-down buyer does end up underwater, they are far less so and far more likely to be able to negotiate a short sale that costs the bank $10k rather than $100k; or borrow their way out of the hole.

  120. Mikeinwaiting says:

    3b 121, 122 and we are being kind.

  121. Juice Box says:

    re #109- History rhymes, our Naval engagement with Iran was April of 1988. We just sent over 8 minesweepers to the gulf and a bunch of those MH-53 mine sweeping helicopters. They are worried about a repeat of 1987-88 when Iran mined the shipping lanes with contact mines. It is much more effective for Iran to drop mines than to take a head on approach in an air and naval engagement. Since the 1980s they have acquired thousands of Chinese and Russian made mines and and untold number of speedboats to deploy those mines. This time around asymmetrical warfare. Can our large navy stop the deployment of thousands of mines? A mine sinking a tanker would send oil prices to the moon.

  122. Anon E. Moose says:

    Mike [95];

    Also, being a ‘prudent buyer’ doesn’t just mean saving/being gifted a down-payment. It also means managing your payment to that after putting 20% down you are not cash-strapped and can save while living. So the guy who went $60k in the hole as a result of a decision made 7 years ago and hasn’t put two nickels together since has made two mistakes, not one.

  123. Mikeinwaiting says:

    Moose 123 true, but the point is even the prudent are in trouble, think they will step in that minefield again. The future of housing will depend on there attitude toward the asset class , did I just say asset.

  124. Libtard and the City says:

    Mike…Just wanted to let you know that the AC repair is still working. :P Thanks for the recco.

  125. brian says:

    It isn’t really though. The culture of the office I’m in has me interacting with the folks hiring and managing money. They’re people I see and talk with and eat lunch with every single day. Not in faraway places. They don’t seem worried. If you’re not interested in what I have to say then fine. But it’s just what I see everyday.

    121.3B says:
    March 22, 2012 at 1:42 pm
    #18 Brian:These guys have their fingers on the pulse of the economy and…….

    With all due respect Brian that is an incredibly naive statement to make, and I will leave it at that.

  126. grim says:

    115 – That’s a $900k house?

    What’s does that require? Just about $350k income using the old 2.5x multiplier?

    You can’t afford those taxes if you are bringing in $350k a year???

  127. gary says:

    3B [115],

    After putting $175,000 (20%) down, you’re left with $5200 a month in PITI just to put the key in the front door. Based on the loan to income ratio, one needs to have an annual income of roughly $2,000,000.

  128. Juice Box says:

    re: #130 – that is a bubble artifact If I ever saw one.

  129. 3B says:

    #29 Brian: I never said I was not interested, I simply said that to assume because these people you work with manage money, etc and that therefore they have their finger on the pulse of the economy is naive; I stand by my statement.

  130. 3B says:

    #24 Mike: Yes, kind.

  131. 3B says:

    #32 Yeah? Well how about pride of ownership? And blue ribbony?

  132. 1987 Condo Buyer says:

    #119….my 20 years in my house and tracking taxes in the area may say otherwise. My block is a bunch of 3 bd ranches with add on family rooms, all taxed around $6500. My house has a second floor addition and I am at $7,950, My town taxes have grown less than 4% a year and last year and this year we will have increases under 3%. My town has one of the lowest debt services in the county. Will meet you at GrassHopper to discuss. I’ll bring my spreadsheets. Nothing has broken loose, BOE won’t give in to 2% raises to teachers….

  133. gary says:

    Condo [136],

    I’m in my house for 10 years now. The taxes were approximately $5,000 then and now stand at $9,300. Every house I inquire about in a 3/2 to 4/2 ranch or split is close to 5 figures in annual taxes. I’m happy that your town has one of the lowest debt services but no matter what town I look into, the taxes are killer. If I trade my house for the same house in a different town, I might get a break for two years on the tax rate but will get hammered on the price. The property taxes have decoupled. If they haven’t in your town, they’re about to. Yesterday’s figures don’t mean a thing any longer.

  134. Brass Balls says:

    I agree with Brian, judging from my Tebow/Manning indicator happy days are here again. Absolutely no one I know is worried about the economy. Then again all the people who are unemployed or lost their homes neither live near me anymore or work near me anymore. Maybe we think things are better and they are not just cause I dont see the poor people anymore. For instance three short sales near my house, coupled in their late 30s to mid 40’s in over their heads all three houses are now owned by newlywed couples with dual incomes and fancy cars. The neighborhood is all happy again. But really what happened to those folks. Just cause I dont see them anymore does not mean their life is any better.

    Plus with Tebow moving to NJ, crime will be down and average salaries will be up.

  135. Brass Balls says:

    So taxes are up $4,300 over ten years. But how much did your salary go up? Also how much did mortgage go down due to refinancing or paying it off. Overall $9,300 in taxes today is easier than $5,000K ten years ago. Plus you got ten raises at work and maybe some promotions. You are what we call in Vegas a WHALE>

    gary says:
    March 22, 2012 at 2:49 pm
    Condo [136],

    I’m in my house for 10 years now. The taxes were approximately $5,000 then and now stand at $9,300. Every house I inquire about in a 3/2 to 4/2 ranch or split is close to 5 figures in annual taxes. I’m happy that your town has one of the lowest debt services but no matter what town I look into, the taxes are killer. If I trade my house for the same house in a different town, I might get a break for two years on the tax rate but will get hammered on the price. The property taxes have decoupled. If they haven’t in your town, they’re about to. Yesterday’s figures don’t mean a thing any longer.

  136. gary says:

    more…

    The realtor I spoke with at an open house this past week lives in a Town House in Hillsdale. She bought it in 2000 and her taxes were $6,000. Now? Her taxes are over $12,000. By the way, my property taxes have increased over 7% per year for the last 10 years.

  137. gary says:

    Brass Balls,

    Plus you got ten raises at work and maybe some promotions.

    LOL!!! You’re f*cking hilarious!

  138. A.West says:

    NJ home prices still falling around me. Here’s a house in my neighborhood listed since last fall, finally dropped asking price $30k to $969k. Taxes only 18k/yr.
    http://www.trulia.com/property/3065447821-17-Linvale-Ln-Bridgewater-NJ-08807
    I’m guessing an asian family will buy it eventually, they are the ones that I’ve seen buying this type of house in the area lately. But probably under $900k. Owner bought for 1.2mn in 2005 (whoops) after it sold for 860k in 2003. So in 7 yrs, the owners will have paid about $300k in capital depreciation, about $120k in property taxes, plus the mortgage, which I could give a ballpark guess of $350k of mortgage & interest, assuming they financed 60% of the purchase price at 6%. That would add up to over $100k/yr to live in the house, assuming they didn’t need to spend on upkeep and repair.

  139. Brian says:

    May God bless Tim Tebow, the Jets, and NJ.

  140. Brian says:

    139 –

    They are living in their parent’s basements saving for their next downpayment while listening to the Dave Ramsey show. Bet on it :)

    “But really what happened to those folks. Just cause I dont see them anymore does not mean their life is any better.”

  141. Brass Balls says:

    Funny I can picture fans booing and cursing sanchez when he throws some interceptions and Tebow gets to start only to have the same done to him. We buy our Jersey with full knowledge that we will be one day burning them in the parking lots and yelling four letter words and throwing beer a few months later when he disappoints. The Jets fans are the best cause they are the worst.

    Brian says:
    March 22, 2012 at 2:59 pm
    May God bless Tim Tebow, the Jets, and NJ.

  142. 3b (115)-

    You’d think for 18K in taxes, they could put the power lines underground.

  143. mikey (120)-

    Last I checked, mutual funds have been experiencing month-over-month outflows for the past four years.

  144. 3B says:

    #47 There: Yeah, but what would one use to tie their blue ribbons on?

  145. 3b (121)-

    Mutual funds have their fingers on the pulse. Too bad it’s the pulse of an expiring hamster.

  146. brian (129)-

    When I hear this kind of thing, I become incredibly worried.

    “The culture of the office I’m in has me interacting with the folks hiring and managing money. They’re people I see and talk with and eat lunch with every single day. Not in faraway places. They don’t seem worried.”

  147. Brass Balls says:

    Most mutual funds have stocks and bond funds. Outflows from stock funds to inflows in bond funds is still money under management. Later on this year the money will flow back to stocks or money markets or short term bond funds when rates start rising

    There Went Meat says:
    March 22, 2012 at 3:37 pm
    mikey (120)-

    Last I checked, mutual funds have been experiencing month-over-month outflows for the past four years.

  148. Brass Balls says:

    So, what goes on at a Jets football game? Written by a Jets Cheerleaders for New Fans. I guess with Tebow Jets will have new fans, that last happened in 1969.

    1. Player Introductions — Stand up and “Airplane”!

    With the help of pyrotechnics and a Flight Crew Cheerleaders tunnel, the Jets introduce their starting 11-player offense or 11-player defense at the beginning of each game. The game captains then get ready for the coin toss, in which the visiting team calls the toss. The winner of the coin toss can either elect to begin the game on offense (receive), begin the game on defense (kickoff), or make the other team decide (defer).

    At any given time, only 11 players from each team are allowed on the field. These players will meet on a field that is 100 yards long and 53⅓ yards wide, which doesn’t include the two 10-yard end zones on each end where the teams can score.

    2. Kickoff — And They’re Off!

    The team starting the game on offense will receive the kickoff from the defending team. During the kickoff, the kicker will kick to the returner, who will attempt to run the ball back with the help of his blockers.

    If the kicked ball reaches the end zone, the returner can either decide to try and run the ball back from the end zone, or elect not to run the ball back; instead his team will automatically start with the ball on the 20-yard line. When the kicker elects not to run the ball back and just start at the 20, this is called a “touchback.” Both teams’ special teams units will play on the kickoff, and after the initial kick and return, the respective offensive and defensive teams will enter the game for the first time.

    3. — Offense – Go, Jets, Go!

    When the Jets are on offense, they are trying to score a touchdown by advancing the football into the other team’s end zone. The defensive team is trying to impede their progress by tackling their runners or blocking/intercepting their passes.

    There are two general ways to advance the ball: (1) passing play and (2) rushing play. A passing play is where the quarterback will throw the ball down field to one of his receivers who will attempt to catch it. A rushing play is where the quarterback immediately hands the ball to one of the running backs who will attempt to run with the ball past the defenders trying to tackle him.

    The offense has four attempts (“downs”) to advance the ball 10 yards. If they are able to advance the ball 10 yards in four downs, they get another fresh set of downs. The team starts at “1st and 10,” which means this is their first attempt and they have 10 yards to go.

    If the offense advances the ball into the defense’s territory but not far enough into the end zone, the offense can instead try a field goal by having their kicker kick the ball through the uprights. A field goal is worth 3 points.

    However, a touchdown is really the key to a win (6 points plus 1 or 2 potential extra points). After scoring a touchdown, the offense has one opportunity to try for extra points. The scoring team can attempt an extra-point kick (worth 1 point), which is the most common action. Alternatively, they can go for a 2-point conversion by running a regular play into the end zone, almost like a second touchdown.

    4. Defense — Stop That Drive!

    As mentioned above, the defensive team is trying to impede the progress of the other team’s offense by tackling the offense’s runners or blocking/intercepting the quarterback’s passes. Simply put, there are three different categories of defenders: (1) linemen; (2) linebackers; and (3) defensive backs.

    The linemen stand in the front and are closest to the other team’s offensive players at the start of the play. Their job is to tackle the quarterback behind the line of scrimmage (a “sack”) before he throws the ball. Linemen are also the first line of defense to try and tackle a running back on a rushing play.

    The linebackers are the second line of defense. Depending on the defensive play that is called, linebackers may also try and sack the quarterback, or instead wait further back to guard against balls that the quarterback passes once they are in the air.

    The defensive backs are divided into cornerbacks and safeties. The cornerbacks’ job is to attempt to stop the receivers from catching the quarterback’s passes. The safeties are the last line of defense, and their job is to stop the offense on long-yardage plays before the offense can score. Safeties can also help cornerbacks guard against passes.

    5. Special Teams — Cheers for Coach Westhoff!

    The special teams units generally deal with: (1) kickoffs (discussed above); (2) punts; and (3) field goal attempts.

    An offensive team will often decide to punt when they were unable to advance the ball 10 yards in four downs and are still far away from the end zone. The punter will catch the ball from the snapper and then try and kick it to the other end of the field where the other team has a kick returner waiting who will try and run the ball back before being tackled.

    When an offensive team is fairly close to the end zone but is running out of downs, they can try a field goal (3 points) instead of going for a touchdown. On a field goal attempt, the snapper will snap the ball to the holder, who will hold the ball on the ground as the kicker tries to kick it through the uprights. The defensive team’s players will try and block the field goal attempt by reaching the ball before the kicker has a chance to kick it past them.

    6. Victory for the Jets!

    To win a football game, the Jets must score more points than the other team by the end of all four quarters. If a regular-season game is still tied after four quarters, the game goes into overtime, where the first team to score wins.

    The 12 best teams in the NFL make the playoffs, based mostly on which teams have the best win-loss records. The NFL is composed of two conferences, the AFC and the NFC. Within each conference, there are four divisions (North, South, East and West). The team with the best record in each division automatically make the playoffs. In addition, two other teams make the playoffs in each conference (i.e., the “wild card” teams). These are the two teams with the best records in their conference out of all the teams that did not win their division.

    Cheers,

    Grace

  149. Juice Box says:

    re: # 153 – JJ full 401k contribution for 2012 is $17,000. That is more than the bonuses that most of Wall St received this year.

  150. relo says:

    152: Clot,

    The below is what gets me.
    118.
    We always get irritated because it’s always a cushy job like “Business Analyst” or “IT Analyst” where they mostly blow hot air and babble with people within the company when we need more people in the field actually doing real work.

    Brian, I happen to respectfully disagree. Lots of “smart” guys at the homebuilders as well who were caught a$$ out.

  151. seif says:

    136 – what kind of 2nd floor addition (type of room, plumbing?, square footage)? and if i could ask: what did it cost (in what year) and what affect did it have on taxes?

    i have been thinking about something like that on some places i look at.

  152. Brian says:

    Money is in all styles of funds. AUM is at record highs.

  153. Brian says:

    Check again meat

  154. 1987 Condo Buyer says:

    #157..you need to determine current assesments and if there is a new assessment coming. You can even check with Town assessor or other houses that have had similar work. For me, I knew we were heading for a new reval..last one was in 1976. I also knew that in recent revals in NJ, the bulk of the assessment increase was due to the land value. I knew that my current house was over assessed so while the taxes jumped about $1500 when I did the addition, the impact of the reval dropped them back down $2,100. I researched 5 years before I added that addition

  155. Jill says:

    Brian #118: Is your company hiring tech support/network guys in NJ?

    3b: Did you buy? Which house?

  156. Brass Balls says:

    Please the 401K is a joke, they should raise it to 100K contribution.

    Juice Box says:
    March 22, 2012 at 3:59 pm
    re: # 153 – JJ full 401k contribution for 2012 is $17,000. That is more than the bonuses that most of Wall St received this year.

  157. 30 year realtor says:

    I believe there will be one more good pop of depreciation after the REO influx swells the inventory. Then it will be a slow sideways and down market for a decade or more.
    Personally all I care about is transactions. Prices don’t matter

  158. Confused in NJ says:

    Gasoline prices are setting records across Europe and exceeding $4 a gallon in California as the rise in crude oil caused by the conflict in Libya punishes companies and consumers.

    Households are cutting back on travel, cinema visits and groceries in the U.K., where prices jumped to 130.68 pence a liter ($8.06 a gallon) yesterday, according to research from the Automobile Association, Britain’s largest motoring organization. Prices set records in the Netherlands and Italy today. The current average U.S. gasoline price is near a two-year high at $3.81 a gallon, according to the AAA website.

  159. gary says:

    30 year [164],

    Always a breath of reason, logic and common sense. :) I believe you’re spot on.

  160. relo says:

    165:

    With the nice weather maybe I should bike to work. 20 mi on 4 & 17, what could go wrong?

  161. Shore Guy says:

    A. West,

    That house near you, even at the current price is $183/sqft. Compare that to over $200 (or more) for cruddy-little houses in cruddy-little towns. Housing has a long way to go down, it seems.

  162. relo says:

    The more the square footin’, the larger the lootin’
    That’s what I said
    The looser the standard, the longer the lanyard
    Or so I’ve read
    Housing bottom
    Housing bottom
    My realtor’s got ’em
    Talk ’bout POS Capes
    My realtor’s got ’em
    Drive me out of my mind.

  163. Bocephus says:

    144. And Tiny Tim

  164. grim says:

    168 – The lower price per square has more to do with the fact that the house is over 5,000 square feet.

    It’s that first square foot that is the most expensive (probably around 300k for that first square foot these days), and it goes downhill pretty quickly after that.

    Generally, it doesn’t pay to build a 2,000 square foot house in NJ anymore. The marginal cost to go larger is so small, that you’d risk taking a huge loss on resale if you didn’t go big. I mean really, what goes into adding another 1,000 feet? 15 minutes of excavator time, a few extra cinderblocks, 2 minutes of concrete pour, a couple more 2x4s, and a few dozen sheets of drywall?

  165. brian (159)-

    Ok, I checked again. But wouldn’t this chart indicate that equity mutual fund inflows have already topped out for this cycle?

    http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/03/20120320_cash2.png

  166. njescapee says:

    A Lot To Drink About – Live From Key West
    http://www.youtube.com/watch?v=xGbrCJfgH8s

  167. Brian says:

    We also have one of the top selling bond funds. Not just equity funds. Smartypants.

  168. Brian, you said earlier that all the money would be coming out of bond funds. I agree with you on that one, as inevitably, yield must be paid.

    If equity funds are already topping out- and bond funds will be heading for the exit- will your new response be that everything will be going into your company’s amazing money market funds?

    Does your company offer any of those fun “enhanced” money market funds? Those were really exciting in 2008-09. It takes a special kind of money manager to break the buck in a vehicle that should practically run on autopilot.

  169. Also, Brian, as of the end of Q4/11, the trend was still outflow from mutual funds in general. Do you believe that, given the situation outlined in #177, the trend has moved- in less than a quarter- back to the positive?

    If the trend is now positive, why? The individual investor, both broke and distrustful of Wall St, has abandoned the mutual fund. There is no dumb retail money hanging out on the sideline. In fact, not only is there no dumb money for this kind of investment…there’s no money at all?

    In what areas does your company see real potential for sustainable inflows this year?

  170. chicagofinance says:

    meat: ETF’s

  171. Fabius Maximus says:

    Nice piece on health care reform.
    http://www.bloomberg.com/news/2012-03-22/health-law-transforming-u-s-as-court-threat-looms.html

    I wonder if SCOTUS will reflect on the impact of Citizens United as they deliberate on Affordable care.

  172. Mikeinwaiting says:

    Fab 180 Good, bad, or indifferent you can not use the interstate commerce law to force people to buy anything. Now if you want to go full tilt and try to implement the British or Canadian type system that is another debate.

  173. Juice Box says:

    Meat – Brian is sharing anedotal, he ain’t carrying water..

  174. AG says:

    67.

    “NJ will not be fixed any time soon, so either learn to live with the pain, or move to greener pastures.”

    This may include leaving the country at least temporarily. No point wasting your energy on politics. The solutions will come after the great crash. The petrodollar is slowly being chipped away at. The relevant news is what countries are setting up trade agreements for oil that bypass the US dollar.

    “In what Riyadh calls “the largest expansion by any oil company in the world”, Sinopec’s deal on Saturday with Saudi oil giant Aramco will allow a major oil refinery to become operational in the Red Sea port of Yanbu by 2014.

    The $8.5 billion joint venture, which covers an area of about 5.2 million square meters, is already under construction. It will process 400,000 barrels of heavy crude oil per day. Aramco will hold a 62.5 percent stake in the plant while Sinopec will own the remaining 37.5 percent.”

    http://www.chinadaily.com.cn/cndy/2012-01/16/content_14449867.htm

  175. AG says:

    Re: Property Taxes.

    Just appeal and then appeal again if necessary. I see waterfront properties near me that are >500k off peak and still cant sell. Why? The 20k tax bill. Some sellers spend thousands fixing up their over taxed, circa 76, crap shack when they should be spending $300 to appeal the tax bill. Eventually this country will become a nation of renters. Fannie and Freddie were merely tools towards nationalization of housing.

    Stay mobile.

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